The war of the Jacobsens

Author: Adele Ferguson
Date: 04/08/2012
Words: 4188
Source: SMH

Publication: Sydney Morning Herald
Section: Good Weekend
Page: 14

They brought some of the biggest names in showbiz to our shores, but now brothers Kevin and colin Jacobsen are locked in a legal battle over millions of dollars. Adele Ferguson traces the muddy origins of a bitter family feud.

traces a family feud that could be worth millions.

His eyes filled with emotion,

Kevin Jacobsen quietly closed the front door of his family home in Sydney's Hunters Hill for the last time. The moment had arrived. The eviction notice had been served, the removal trucks had their engines running and the bank was about to have its day. Hurriedly walking down the path, his head bowed, he knew this was no time for sentimentality or fond farewells - even if this refuge, the place that he and his wife, Billie, had called home for the past 28 years, was the last remaining asset to be lost to him. The date was March 30, 2012, and it marked a pride-swallowing final chapter for the man who'd once been lauded in the entertainment industry as a legend for his discovery of bands such as the Bee Gees and his building of a sweeping business empire that had been responsible for bringing to Australia many of the world's biggest acts.

This certainly wasn't how the 78-year-old promoter had imagined his twilight years playing out: penniless, homeless, forced to rely on the generosity and goodwill of family and friends after a tumultuous, public and far-reaching parting of the ways with his hitherto closest ally and business partner, younger brother Colin, three years earlier.

How did it come to this? How could the one-time multi-millionaire who created an entertainment group that managed rock stars and promoted the likes of Elton John, Billy Joel, Bruce Springsteen, Michael Jackson, Barbra Streisand and the Three Tenors find himself in such a parlous financial situation? He and Colin were, after all, a pair with matchless showbiz credentials stretching all the way back to the late 1950s when, together, they appeared as piano player and front man respectively in Col Joye and the Joy Boys, belting out smash-hit covers such as Bye Bye Baby and Be-Bop-A-Lula.

"The split between the brothers and what has happened to Kevin is worse than a tragedy because a tragedy ends," says Bruce Glatman, president and chief executive of LA-based entertainment company Encore International, who has known the Jacobsen brothers for 35 years. "It's a tragedy because Kevin's reputation has been tarnished and he is one of the best in the business. When the Bee Gees came to Sydney in 1999, they stopped the show and thanked Kevin for discovering them. Can you imagine that? He's like most people in this business: he deals from the gut and this has hurt him."

Glatman compares the Jacobsen fight to the Hatfields and McCoys, two 19th-century American hillbilly families who fought so bitterly that they have become a metaphor for any two feuding rival parties. "If I had a wish it would be to put Humpty Dumpty together again, but I fear that this will never happen. This split is forever."

Kevin, these days sporting dyed black eyebrows and tinted auburn hair as if to bolster his courage, refers continually to the man he used to be - the fast-talking promoter who picked a show based on his gut feeling and called Bruce Springsteen a friend. Over the years he has gone head to head with a few local promoters, such as Melbourne-based Michael Coppel, who once described him as someone who portrays himself as a fool the better to take advantage of people. "Kevin portrays himself as a bumbling, loveable, -avuncular character who stumbles through life," he told The Australian. "But I think that's an act."

A former long-serving employee describes him as mercurial, but someone who always treated the artists well: "Colin was behind the scenes. No one was ever sure what he did; he wasn't as charming as Kevin." Glatman says he respected Kevin so much that he let him share his offices in LA. "The only time Col was ever involved was when the concerts took place and he would come to introduce himself after the concert," Glatman claims. "I introduced Kevin to Barbra Streisand's manager. She performed four outdoor shows in Australia in 2000 - a remarkable feat for Barbra, and a great coup for Kevin."

Family bust-ups are never straightforward, even less so when money and power are involved. The Jacobsen versus Jacobsen battle, which has culminated in a plethora of legal challenges, is certainly no exception.

Colin and his daughter, 37-year-old Amber, have declined to make any comment to Good Weekend about Kevin's plight - or the part Kevin alleges they've played in reducing his circumstances so dramatically. The battle lines have been drawn and friends of both families have been forced to take sides. The Jacobsens' younger brother, Keith, 73, and sister, Carol, 68, are firmly in Colin's camp: Kevin says Carol and Col's wife, Dalys, have been friends since they were teenagers, and even had a double wedding in Fiji. Keith, he adds, was always closer to Col and played bass guitar in Col Joye and the Joy Boys but was never involved in the family business empire.

Mutual friends, including former federal tourism minister in the Hawke era John Brown, have also had to pick sides. Meanwhile, at the heart of Kevin's camp are his wife, Billie, their son, Michael, who is 33, and Kevin's two children from his first marriage to Merris, who died in 1976: Vicki, 51, and 50-year-old David.

To understand what went wrong requires a step back in time to when Kevin's son, Michael, and Colin's daughter, Amber, joined the family-run Jacobsen Group. Until this second generation had a part to play in a business that had been thriving for four decades, the brothers' relationship was viewed by many as one of the closest in showbiz. Amber, the older of the two, came on board in 1997 at the age of 23; Michael in 2002 when he, too, was 23. For Kevin, however, he was always the logical successor. "Michael was the one who accompanied me to the office in his school holidays from the time when he was a young boy," he says.

The cousins clashed. Michael, a quiet man, disliked confrontation, while Amber has been described as assertive and ambitious. "It seems that whatever job Michael undertook, Amber would try to get involved," claims Kevin. "For example, Michael attended all the meetings we had in New Zealand during the initial negotiating period with the Auckland City Council for an entertainment centre in 2002, which included putting the development team together of project managers Lend Lease, Crawford Architects, international designers, etc. While Michael was on holiday, Amber abandoned the De La Guarda [a physical theatre troupe] show we were promoting in Sydney at the time, travelled to New Zealand and replaced Michael." Kevin also alleges that while Michael was the director of marketing for Dirty Dancing, Amber's interferences caused Michael to work out of the office of an advertising agency. "He never returned to the Jacobsen space," he recalls.

Around the time that Michael joined the business, Kevin and Colin decided to create a new company, Jacobsen Entertainment, and list it on the Australian Securities Exchange (ASX). It was a decision shared by all members of the family, but it proved to be fateful.

The empire was growing like Topsy, having expanded into entertainment venues, including the Sydney Entertainment Centre - which Kevin had convinced the government to build in the 1980s - Sydney's Capitol Theatre and the Brisbane Entertainment Centre. The company had also won its tender to develop the entertainment centre in Auckland at a cost of almost $90 million. But within weeks of the company listing on the ASX in 2002 at $1 a share, the share price tanked as a series of productions - notably The Witches of Eastwick, which, paradoxically, had enjoyed rave reviews - failed to perform at the box office. Nine months later, the shares were trading at two cents apiece and the company was drowning in a sea of red ink. By 2003 it was placed into voluntary administration.

As executive chairman and the public face of the company, Kevin took the rap for the $6-million loss of investor money. He blamed the collapse on everything from the Iraq War to drought and bad publicity, none of which held sway with investors who believed he'd over-promised and under-delivered. Whatever the case, it became a watershed moment for family relations: Colin and Amber decided they wanted a bigger say in the remaining assets of the family empire. Kevin remembers Colin saying to him: "It's Amber's turn now. You've had your day in the sun."

Kevin says he shrugged it off and went all out to try to revive the family fortunes. By 2004 he'd pulled off the deal of a lifetime: securing the worldwide rights to produce the Dirty Dancing stage show, structuring the rights through a company he set up called Time of My Life Pty Ltd. "This deal was my biggest coup," he says. "I thought it would make us all rich."

Kevin owned a one-half share of Time of My Life Pty Ltd and Colin, through companies controlled by him, the remaining half share. "I invested significant funds in this venture," says Kevin. "I recall that I cashed in my superannuation and life insurance entitlements and invested them ... I put in money through my credit card and Billie and Michael injected money into the company in its early stages."

Dirty dancing opened in november 2004 at Sydney's Theatre Royal and was a smash hit. Two years later, it went gangbusters in London, ultimately grossing $500 million at the box office. But although the Jacobsens had never before scaled such box-office heights, relations between the two arms of the family continued to deteriorate.

While Kevin spent more and more time stitching up new deals in the US and Europe for Dirty Dancing, Colin and Amber wanted an increasing say in what was going on back home, particularly after the sudden elevation in 2005 of Michael, at the age of 26, to become the managing director of key Jacobsen Group company Arena Management, which ran the Sydney Entertainment Centre.

In 2007, they apparently attempted to topple him. Kevin claims that he was furious when he found out they had tried to persuade the board to sack his son. "I couldn't believe Colin would do this to Michael," he says. "I remember telling him if he wasn't family I'd have decked him."

Behind the happy-families facade erected for the public, the relationship between the two clans daily grew more toxic. In October 2007, the game was almost up when media reports emerged that police had been called into the Jacobsen Group offices after Kevin had arrived for work one morning to discover that all the locks had been changed. Neither camp made public comment but, by the end of 2007, Colin and Amber had instigated legal proceedings in Australia and Britain over the jewel in the family crown, Dirty Dancing. An affidavit stated that Amber no longer had confidence in her uncle's ability to act in the best interests of the family. Kevin says it was a case of Amber believing he was misappropriating funds for his own benefit. "It was simply untrue," he says.

It became an unworkable situation, according to John Brown, who joined the board of Time

of My Life in 2008, along with James Vernon, a film producer and fundraiser, to try to introduce some impartiality. The board comprised Kevin and Billie Jacobsen, representing Kevin Jacobsen Pty Ltd; Amber and Colin Jacobsen, representing Colin's family company, Zoulos Pty Ltd; and Brown and Vernon.

Chaos reigned from the get-go with meetings quickly degenerating into slanging matches. Accusations of mismanagement were hurled from both sides; longstanding executives left and Brown and Vernon resigned. "My presence just created tensions and angst," says Brown. "Amber was overseas at the time and would phone in for the board meetings." According to Brown, she would scream and yell that he should get off the board. "I could see where it was all going, so I quit," Brown recalls.

As time of our life continued to rake in the cash, Arena Management, headed by Michael, was in major financial difficulty. Michael resigned from the board in March 2009 and, three months later, it collapsed. He turned to his Pentecostal church, Hillsong, for answers. In a letter to the company's administrators, he attracted headlines with his suggested solution. "I have consulted God on this matter in recent days and it is His wish that I propose a deed of company arrangement [an agreement between a company and its creditors that govern how a company's affairs will be dealt with when it collapses] and resolve this situation. There is a need to reach out and meet the needs of others." In a letter to the administrator of the company, Randall Joubert, that he sent from London in September 2009, Michael wrote that the Sydney Entertainment Centre had been "cursed for some years".

The collapse of Arena Management was also a curtain call for the two families and the Jacobsen Group, as the umbrella company for Kevin's Kevin Jacobsen Pty Ltd and Colin's Zoulos Pty Ltd. In June 2009, in a document called the Kemp Strang Agreement, they decided to part ways and split the business 50:50.

The news of the split came as a shock to the outside world, but Kevin, too, was struggling with the reality of his new situation. "I couldn't believe that my own brother - whose shirts I had ironed - had become so spiteful towards me and my family," he recalls. "My parents would never have believed it possible."

Looking back, Kevin says the idea to split the business was a good one, but not the circumstances in which he recalls signing the agreement.It ran to 1400 pages, and he claims it was signed under duress. "I remember waiting in an office, then seeing this female solicitor walk in with a pile of documents and I was horrified; I started swearing," he recalls. "I said, 'What's this bullshit about? Do you have the summary before I sign?' She said, 'There is no summary.' I said to Michael, 'Michael, this is a load of bullshit. What's it all about?'"

Kevin alleges a telephone call had come through from a private Sydney company called Allind. The message was that if he didn't sign the agreement in front of him, his company, Kevin Jacobsen Pty Ltd, would be placed into receivership. (Allind is the family company of former Jacobsen ally John David, who used to own David Holdings, a wholesale supermarket chain. Allind was calling in a $4 million debt. In a press statement in 2009, lawyers for John David said the decision to reclaim the $4 million "reflects the extreme frustration felt by Mr John David after his family provided substantial financial support to the Jacobsen family by way of loans in 2003. These were repayable at the expiration of two years, and by selling shares in a key Jacobsen company in March 2008. Despite patient negotiations and extensions of time for the repayment, no funds have been repaid since June 2008, leaving Mr David with no option but to pursue the matter through the courts." Kevin claims the money was used for the benefit of the umbrella company but he was the target because he had gone personal guarantor.) With pressure building intolerably, Kevin says, he signed the agreement.

(Michael, who'd become ill through stress, left the country as soon as the Kemp Strang Agreement was signed and now lives in London with his wife, Romy, and their two children. He continues to struggle financially and healthwise and his relationship with his parents is strained.)

It was agreed that proceeds from the sale of the Auckland entertainment centre would be used to repay the Allind debt, but by February 2010 it still hadn't been sold. Consequently, Kevin's private company, Kevin Jacobsen Pty Ltd, was placed into receivership.

Receiver John Lord was appointed to Kevin Jacobsen Pty Ltd to sell assets to repay the debt. And it is from this point onwards that matters become very murky indeed. In an affidavit filed in the NSW Federal Court on March 17, 2011, Lord states that on or before October 2010, Allind took possession of Kevin's shares in a number of family businesses, including Jacobsen Venue Management, Time of My Life Pty Ltd (which holds the global rights to Dirty Dancing) and the Dirty Dancing United Kingdom Unit Trust. Lord states that he "now understands" Allind then sold Kevin's half share in both Jacobsen Venue Management and Time of My Life Pty Ltd to Zoulos, Colin Jacobsen's family company, for $1 each.

Kevin argues that the half share in both Jacobsen Venue Management and Time of My Life Pty Ltd were worth a significant amount more than the $1 each price tag his brother's company appears to have paid for them. He cites an information memorandum that had valued the global rights to Dirty Dancing in mid-2010 at approximately $12.2 million. Colin and Amber have maintained a steadfast silence on the issue. A letter from their lawyer sent to Good Weekend says simply: "My clients have avoided commenting to the media on any disputes with Kevin Jacobsen, and maintain this approach." Calls to Allind have also gone unanswered.

Liquidators Sheahan Lock Partners are currently investigating the sale of the shares. Says Ian Lock: "Prima facie they are worth many millions of dollars, but they have passed out of the control of Kevin for what appears to be a very small amount." Under the Corporations Act, a liquidator can seek to overturn any transaction where assets are sold at less than their market value. In Kevin's case, if the assets that were sold are proved to be worth those "many millions of dollars", the entire transaction could be overturned and the half shares, and assets,

returned to him.

Good Weekend can also reveal that Kevin called the Australian Tax Office in March 2009, just before he and his brother split the business, raising concerns about the tax structure of the UK Dirty Dancing business that he and Colin shared, which he was concerned might not have been paying enough tax. The ATO referred Kevin's concerns to Project Wickenby, the tax agency that was set up in 2006 to fight tax havens, particularly those used in the entertainment industry. In 2007 it convicted music entrepreneur Glenn Wheatley of tax fraud and more recently Paul Hogan settled an eight-year dispute. The UK Dirty Dancing investigation is ongoing.

it is an awkward situation when brother fights brother, but the enmity in this fight is breathtaking, according to friends. This has been nowhere more clearly demonstrated than when Billie, who has a pacemaker and is ill with peripheral neuropathy, which she believes has been brought on by stress, received a sheriff's eviction notice late last year on the family home in Hunters Hill.

Vicki went to her uncle's house in Woolwich, the suburb adjoining Hunters Hill, where she handed her purse to Dalys. "She said, 'What's this for?'" recalls Vicki. "I said, 'There's $10 in it. You've got everything else. You may as well have that.'"

According to Vicki, there aren't words to describe the "bad fairy tale" in which the family now finds itself. "I could never treat anyone as poorly as Colin and his family have treated my father," she says. "I find it bewildering that all of his siblings have disowned us. Uncle Keith is like Kevin, creative and intelligent, and yet he has chosen not to speak with him to learn anything about what's occurred. It makes me feel that the two families were only ever held together by money."

With the house now sold and the bank paid, Kevin and Billie are fighting to find their way out of the financial abyss. "Yesterday, when I got home, Billie was sobbing," says Kevin. "She does that a lot these days. She is pretty tough - we both are - but this would test the toughest."

Despite the family shenanigans, the stage show Dirty Dancing is still going strong, recently concluding a five-year season in London, where it grossed $500 million. It is now touring the UK for two years and playing in Germany; Kevin believes it is on track to gross $2 billion. He's not likely to see any of that money, though.

"When I reflect back, every cent I earned went into the family business," he says. "I remember being very hurt and disappointed when I found out [in the 1980s] that Colin had 50 per cent of a pub on the [NSW] Central Coast and never told me. When I found out, I said, 'Colin, how come? Is this a company thing or just you?' He said,

'Just me.' I said, 'Wait a minute. I started a pub called Sheila's in North Sydney and it went into the business.'"

The battle has certainly taken its toll on Billie, Kevin's wife of 34 years. Now under constant medical care, she says, "They [Col and his family] now have Dirty Dancing with its potential worldwide gross revenue of $2 billion; they have the entertainment centre [Vector Arena] in Auckland, which Kevin sought and negotiated for the family business - a 40-year ownership, and the revenues that Kevin is entitled to. They have a beautiful old stone house in Woolwich, and we understand that Amber has now invested in an Australian coffee franchise in New York. We have lost everything ... Our income and lifestyle have been reduced to zero."

John Brown is also deeply saddened by the dispute. He had been friends with both brothers for more than 40 years before the falling out. "I hate the fact that I have fallen out with Colin - he was a nice fellow - but there was no choice. We all had to take sides," he says. In Brown's opinion, Kevin was the majordomo, the centre of the circle. "Everyone and everything revolved around him," Brown claims. "He was the breadwinner and kept it all going while Colin was singing songs like Bye Bye Baby."

Other friends and business associates of the brothers contacted by Good Weekend to comment on the rift - among them Eleanor Bergstein, who wrote the original Dirty Dancing movie - are unwilling to talk.

To Kevin, it is a heartbreaking end to a family business that he started as a small talent agency and then built into one of the biggest entertainment businesses in the country. "I used to do all the bookings of the tours for the band [Col Joye and the Joy Boys] by myself," he says. "I realised there was a business doing this sort of thing, so I started doing it for other people like Olivia Newton-John and Peter Allen," he says. "I wanted to make my family rich."

Kevin's game plan is to claw back up to $100 million he believes belongs to his immediate family. "A new Jacobsen company headed by David has been formed," he says. "As a family we are looking forward to new beginnings."

Says David: "While we've endured great emotional suffering and debilitating physical health caused by the unbelievable barrage of wrongdoings against us over the past three years, the circumstances have also been a catalyst for us to relentlessly seek a fair and just outcome, irrespective of what that might take. I am happy to say as the CEO of Jacobsen International that we have a number of exciting international projects that have been in development for quite a while."

Meanwhile, Kevin has enlisted a private investigator to help him recover what he believes belongs to him. He, Billie, David and the private investigator, Ian James, meet each week and have mapped out a strategy. James has been working on the case for nine months and has pieced together the evidentiary trail necessary to present a brief to a lawyer. This covers the company structure before Kevin's split with his brother, the various financial transactions that have taken place in the past few years and dissection of the Kemp Strang Agreement.

James has prepared a 1400-page brief, identifying 21 issues that are capable of recovering more than $50 million. He is also trying to secure a litigation funder to bankroll the legal action that will ensue. James works on the promise of receiving a decent commission if he can recover what Jacobsen believes is his.

The ever-optimistic Kevin believes there's still a place for him in the industry. Under the company headed by David, he's working as a consultant to help bring out to Australia an international act in February next year.

"My mother, Minnie, always told me, 'Treat others the way you would like to be treated yourself', while my grandfather used to say, 'Treat everyone as a rogue until you find otherwise,'" says Kevin. "While I have tried to live my life according to Minnie's maxim, perhaps at times I should have paid more attention to old Pop Jaco's advice."